Correlation Between New England and Rafael Holdings

Can any of the company-specific risk be diversified away by investing in both New England and Rafael Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining New England and Rafael Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New England Realty and Rafael Holdings Class, you can compare the effects of market volatilities on New England and Rafael Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in New England with a short position of Rafael Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of New England and Rafael Holdings.

Diversification Opportunities for New England and Rafael Holdings

0.36

Correlation Coefficient

New England  Rafael Holdings

Weak diversification

The 3 months correlation between New and Rafael is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding New England Realty and Rafael Holdings Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafael Holdings Class and New England is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on New England Realty are associated (or correlated) with Rafael Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafael Holdings Class has no effect on the direction of New England i.e., New England and Rafael Holdings go up and down completely randomly.

Pair Corralation between New England and Rafael Holdings

Considering the 90-day investment horizon New England Realty is expected to under-perform the Rafael Holdings. But the stock apears to be less risky and, when comparing its historical volatility, New England Realty is 1.09 times less risky than Rafael Holdings. The stock trades about -0.07 of its potential returns per unit of risk. The Rafael Holdings Class is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  181.00  in Rafael Holdings Class on December 2, 2024 and sell it today you would earn a total of  21.00  from holding Rafael Holdings Class or generate 11.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	26.23%
Values	Daily Returns

New England Realty  vs.  Rafael Holdings Class

New England Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days New England Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Rafael Holdings Class

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rafael Holdings Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Rafael Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New England and Rafael Holdings

The main advantage of trading using opposite New England and Rafael Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New England position performs unexpectedly, Rafael Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Rafael Holdings will offset losses from the drop in Rafael Holdings' long position.

The idea behind New England Realty and Rafael Holdings Class pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.